MS recently instituted an in-house recycling program. The benefits of this progr

Question

MS recently instituted an in-house recycling program. The benefits of this program include not only the benefits to the environment of recycling but also the goodwill generated by AMS’s leadership in this area. The costs of recycling include all of the energy, labor, and space required to do the recycling. Suppose these benefits and costs are given by TR(Q)=100Q – 2Q2 and TC(Q) = 2Q (Note that MR = 100 – 4Q , and MC= 2 ). What level of Q minimizes the total costs of recycling? What level of recycling is optimal? Why?

Explanation / Answer

TR(Q)=100Q – 2Q2

MR=dTR/dQ=100-4Q

TC(Q) = 2Q

MC=dTC/dQ=2

TC is minimum when Q=0

For optimal Q,MR=MC since it is monopoly,has leadership in its area

100 – 4Q=2

Q=24.5 is optimal .

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.